Car buyers and sellers hit for double tax in the month a vehicle changes hands are delivering a £38million windfall to the Government, claims the AA.

New rules mean existing tax can no longer be passed on with a car when it is sold - and force buyers to purchase that entire month’s tax but do not allow sellers to gain a refund for it.

This double charging has allowed the Government to cash in, as a buyer purchasing a car in the middle of the month must pay for the whole month’s tax, but the seller cannot get that month’s payment refunded – only the remaining full months.

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End of an era: The death of the paper disc means tax can no longer be passed on - and now buyers and sellers must pay double in the month a car changes hands

The change arrived with the scrapping of the tax discs last October and move to an electronic system for vehicle excise duty, but rather than working on a daily basis it works on a monthly basis.

Those who fall foul of the new rules can find their cars clamped or towed away and face hefty fines.

AA president Edmund King said: ‘UK drivers now pay 'double tax' for the month that a vehicle changes hands and the DVLA's clampers are now netting 3,000 more untaxed cars a month than this time last year.’

The AA said the changes contributed to a 71 per cent increase in the number of cars clamped for being untaxed, up from 5,115 in February last year to 8,741 this February.

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When a car is sold under the new car tax system, the DVLA must be notified and the existing tax is cancelled with remaining months refunded. The new owner must purchase their own tax from the day they buy the car.

The new system means that someone buying a car on the 29th of the month should purchase car tax from the start of that month.

However, someone selling a car on the 2nd of the month would not be entitled to a refund for that month.

Critics of the system argue that their is no reason why tax cannot be transferred digitally with a car.

The AA said it had heard of cases where a car was transferred from one member of the family to another but the family were shocked to find tax couldn’t be transferred. Furthermore, while one member had to buy tax for that month, the other didn’t get a refund.

It said: ‘Hence the family were paying tax twice for the same month on what has become a 'doppelganger' vehicle.’

In one recent case, a couple who swapped cars and notified the DVLA were caught out and hit by a huge bill. Christopher and Marianna Webb, from Bridport, Dorset, had to pay £822 to get their Ford Focus back after returning from holiday to find it had been impounded for non-payment of vehicle excise duty.

Road to nowhere: Drivers who fall foul of the new rules can find their vehicles clamped

From sold with tax remaining to getting clamped

For decades, if a car changed ownership any remaining vehicle excise duty would be transferred as well.

Anyone selling a second-hand car could boast that it was ‘taxed and MOT’d’ until a certain date – it was considered one of the perks of buying second hand.

From October 2014, the paid tax has been automatically cancelled if a car changes hands, even if there is a valid tax disc in the window.

This means that the new owner must pay again. The former owner will automatically receive a refund of any full months of remaining paid tax.

It affects anyone who buys or sells a car, or just changes the name to whom a car is registered.

The number of cars that have been clamped has rocketed by 60 per cent since the new rules came into force, from about 5,000 a month before the changes to 8,630 after.

The increase suggests drivers may be confused by the fact outstanding tax is cancelled, even if there is a seemingly valid tax disc in the car window.

To release an untaxed vehicle that has been clamped a fee of £100 must be paid. In addition, the vehicle must be taxed or a surety of £160 for a car or motorcycle must be paid before the vehicle can be released.

The surety payment is forfeited if the keeper does not show the vehicle has been taxed within 2 weeks. This may be done at the nearest car pound.

If the vehicle is not released within 24 hours it is impounded and the release fee increases to £200.

There is a £21 per day storage charge as well as the requirement to tax the vehicle or make a surety payment. This must be done at the car pound where the vehicle is being stored. The motorist would need to call NSL on 0843 224 1999 to find out which car pound this would be.

If the necessary release and storage fees are not paid, DVLA could dispose of the vehicle after it has been in the car pound for seven days.

The DVLA argued that despite the AA's claims of a windfall from double-charging, it was now refunding more tax.

A DVLA spokesman said: 'Any potential revenue gains are offset by automatically refunding more motorists. Between October 2014 and January 2015 we refunded around £120 million, which is more than double the amount in the same period a year before.'